The won-dollar exchange rate against the U.S. dollar closed at 1,491 won on the 14th. It rose 0.4 won from the previous day.
The rise in the won-dollar exchange rate that day is seen as due to foreigners' net selling of domestic stocks. When foreigners sell domestic stocks, it means demand has grown to convert won into dollars for remittance overseas, so the won-dollar exchange rate tends to rise. That day, foreigners were net sellers of 2.1674 trillion won in the Korea Exchange main board and 148.6 billion won worth of shares on KOSDAQ.
In addition, deepening concerns about global inflation also worked to push the won-dollar exchange rate higher. Overnight, the U.S. Department of Labor said the April producer price index (PPI) rose 1.4% from the previous month and 6% from a year earlier. It was the biggest increase since 2022.
When prices rise like this, the U.S. Federal Reserve (Fed) is more likely to raise the benchmark interest rate. When U.S. rates rise, investors flock to dollar assets, leading to dollar strength (a higher won-dollar exchange rate).
Meanwhile, President Lee Jae-myung met with U.S. Treasury Secretary Scott Bessent at the Blue House on the 13th and is said to have proposed a Korea-U.S. currency swap. A currency swap is a contract that allows two countries to exchange each other's currencies at a prearranged rate for a set period, which helps stabilize exchange rates.